Government bans onion exports with immediate effect

NEW DELHI: The government on Sunday banned exports of all varieties of onion in a bid to tame prices, which have doubled in the domestic retail market since July. It also imposed stock limits on onion traders to facilitate release of stocks and prevent hoarding by traders.

Retail traders across the country will now be able to stock only up to 100 quintals of onion while wholesale traders will be allowed to stock up to 500 quintals. In the past, the Centre had authorised states to impose stock limits but this time it has imposed the limits on its own.

The commerce and industry ministry amended the export policy of onion, making it ‘prohibited’ from ‘free’ earlier.

India exported fresh and chilled onions worth $496.82 million in 2018-19. Exports were worth $154.5 million in the first four months of 2019-20.

“Export of all varieties of onions, as described above, is prohibited with immediate effect,” the Directorate General of Foreign Trade (DGFT) said in a notification on Sunday.

The decision to ban exports, which is expected to improve domestic availability and cool prices, came after the commerce department had a series of meetings with the cabinet secretary, the principal advisor to the Prime Minister and officials of the ministry of consumer affairs, food and public distribution.

The government has also asked states to take strict measures, including raids, to prevent hoarding by traders. A central buffer of 56,700 million tonnes built through NAFED is being used to supply onions to Delhi at Rs 23.9 per kg. While Haryana and Andhra Pradesh are also using this buffer, other states have been asked to do the same.

Bangladesh, Sri Lanka and the UAE are the top three destinations for Indian onions.

“Onion prices have been on the rise especially in the last last two weeks. So, the move was required. The demand for onions falls this time of the year,” said an official referring to the nine-day Hindu festival of Navratri that began Sunday.

A fortnight ago, the government had set the minimum export price (MEP) of onion at $850 a tonne to curb its shipments and help bring down soaring prices in the domestic market due to floods in parts of major growing states of Maharashtra and Karnataka. The retail price of onion, a key kitchen staple, shot up to Rs 70-80 per kg from Rs 12-15 six months, while it climbed to Rs 40-50 per kg in the wholesale market.

Consumer affairs secretary Avinash K Srivastava in a letter to DGFT on Sunday asked to ban export of onions immediately “with a view to improve domestic availability and control prices”.

The government had also asked Safal, the fresh fruit and vegetable retailing arm of Mother Dairy, to keep the entitlement at 2 kg onion at its outlets and sell it at subsidised rate.

“A downward trend in exports was already visible because of the high prices but we don’t expect a major impact of the prohibition as this is a temporary, cyclical issue,” said another official aware of the details.